Singapore’s strata industrial sales finally recover after three consecutive quarters

Sales grew 8.4% to 424 transactions in Q2.

Following three consecutive quarters of decline, data from Savills revealed that strata industrial sales activity in Singapore increased 8.4% QoQ to 424 transactions in Q2. 

Although there are factors such as high interest rates and a slowdown in the manufacturing sector, sales activity started to show recovery across all segments of the industrial property type. 

Here’s more from Savills:

While multiple-user factory saw the slowest recovery (4.6% QoQ), single-user factory and warehouse recorded an uptick of 44.0% and 28.6% QoQ in their respective sales volume. Despite the increase in sales volume, the total transaction value for single- and multiple-user factory segments fell in Q2. 

This could imply that buyers are more attracted to more palatable size and quantum, given uncertain future business conditions, and higher borrowing costs. 

Industrial prices also continued growing, with the JTC price index rising consecutively since Q2/2021. The Savills’ basket of industrial properties showed that in Q2/2023, prices for 30- and 60-year leasehold industrial properties increased by 1.4% and 2.4% QoQ to S$320 per sq ft and S$495 per sq ft respectively. 

Owing to higher financing costs, some demand could have shifted to properties with shorter leases and more affordable quantum. The quantum play could lead to faster price escalation for the leasehold properties in future. 

On the other hand, the rate of price growth for freehold properties continued to moderate in Q2. Compared with 1.6% QoQ in Q1, prices for freehold properties rose 1.1% QoQ to S$797 per sq ft.